By Parisa Hafezi
TEHRAN (Reuters) - Iran proclaimed advances in nuclear know-how on Wednesday, including new centrifuges able to enrich uranium much faster, a move that may hasten a drift towards confrontation with the West over suspicions it is seeking the means to make atomic bombs.
Tehran's resolve to pursue a nuclear program showed no sign of wavering despite Western sanctions inflicting increasing damage on its oil-based economy.
"The era of bullying nations has passed. The arrogant powers cannot monopolize nuclear technology. They tried to prevent us by issuing sanctions and resolutions but failed," President Mahmoud Ahmadinejad said in a live television broadcast.
"Our nuclear path will continue."
However, Iran's Arabic-language Al Alam television said the government had handed a letter to EU foreign policy chief Catherine Ashton expressing readiness to "hold new talks over its nuclear program in a constructive way."
An Ashton spokeswoman confirmed receipt of the letter, saying she was evaluating it and would consult with the United States, Russia, China and other partners among the big powers.
Iran has long refused to negotiate curbs on its nuclear program, saying it is intended to produce electricity for booming domestic demand and for other civilian uses.
The United States and Israel have not ruled out military action against Iran if diplomacy and sanctions fail.
Washington however played down Iran's latest announcement, saying its reported advances were "not terribly new and not terribly impressive."
"We frankly don't see a lot new here. This is not big news. In fact it seems to have been hyped," a State Department spokeswoman said.
IRAN DENIES BANNING OIL EXPORTS TO EU
Iran's Oil Ministry denied a state media report that it had cut off oil exports to six European Union states.
"We deny this report ... If such a decision is made, it will be announced by Iran's Supreme National Security Council," a spokesman for the ministry told Reuters.
Iran's English language Press TV said Tehran had halted oil deliveries to France, Portugal, Italy, Greece, Netherlands and Spain -- its biggest EU customers -- in retaliation for an EU ban on Iranian crude due to take effect in July.
The Islamic Republic is the world's No. 5 oil exporter, with 2.6 million barrels going abroad daily, and the EU consumes around a fifth of those volumes.
With Western sanctions now spreading to block Iran's oil exports and central bank financing of trade, Tehran has been resorting to barter to import staples like rice, cooking oil and tea, commodities traders say.
The most recent talks between world powers and Iran failed in January 2011 because of Tehran's unwillingness to discuss transparent limits on enrichment, as demanded by several U.N. Security Council resolutions passed since 2006.
Map of Iranian oil industry: http://link.reuters.com/nuh45s
Crude imports from Iran: http://link.reuters.com/dab65s
Iran oil exports: http://link.reuters.com/pyw35s
Iran exports to Europe: http://link.reuters.com/dax35s
NEW GENERATION OF CENTRIFUGE
The nuclear achievements proclaimed by Tehran involved a new line of uranium enrichment centrifuge and the loading of its first domestically produced batch of fuel into a research reactor that is expected to soon run out of imported stocks.
Tehran has for some years been developing and testing new generations of centrifuges to replace its outdated, erratic "P-1" model. In January it said it had successfully manufactured and tested its own fuel rods for use in nuclear power plants.
Ahmadinejad said the "fourth generation" of centrifuge would be able to refine uranium three times as fast as previously.
If Iran eventually succeeded in introducing modern centrifuges for production, it could significantly shorten the time needed to stockpile enriched uranium, which can generate electricity or, if refined much more, nuclear explosions.
Last year, Iran installed two newer models for large scale testing at a research site near the central town of Natanz.
But it remains unclear whether Tehran, under increasingly strict trade sanctions, has the means and components to make the more sophisticated machines in industrial quantity.
"We have seen this before. We have seen these announcements and these grand unveilings and it turns out that there was less there than meets the eye. I suspect this is the same case," said Shannon Kile at the Stockholm International Peace Research Institute (SIPRI).
However, Ahmadinejad said Iran had significantly increased the number of centrifuges at its main enrichment site at Natanz, saying there were now 9,000 such machines installed there.
In its last report on Iran, in November, the U.N. nuclear watchdog said there were 8,000 installed centrifuges at Natanz, of which up to 6,200 were operating.
MAJOR THREAT, FRANCE SAYS
France said Tehran's latest moves again demonstrated that it would rather ignore international obligations than cooperate.
A British Foreign Office spokesman said: "(This) does not give any confidence that Iran is ready to engage meaningfully on the international community's well-founded concerns about its nuclear program. Until it does so we'll only increase peaceful and legitimate pressure on Iran to return to negotiations."
Russia said global powers must work harder to coax concessions from Iran, warning that Tehran's willingness to compromise was waning as it makes progress toward the potential capability of building nuclear warheads.
Making a case for a renewed dialogue, Deputy Foreign Minister Sergei Ryabkov said U.N. sanctions and additional measures introduced by Western nations had had "zero" effect on its nuclear program.
Iran has threatened retaliation for any attack or effective ban on its oil exports, suggesting it could seal off the main Gulf export shipping channel, the Strait of Hormuz, used by a third of the world's crude oil tankers.
NEW FUEL FOR RESEARCH REACTOR
State television aired live footage of Ahmadinejad loading Iranian-made fuel rods into the Tehran Research Reactor and called this "a sign of Iranian scientists' achievements."
The Tehran reactor produces radio isotopes for medical use and agriculture. Iran says it was forced to manufacture its own fuel for the Tehran reactor after failing to agree terms for a deal to obtain it from the West.
In 2010, Iran alarmed the West by starting to enrich uranium to a fissile purity of 20 percent for the stated purpose of reprocessing into special fuel for the Tehran reactor.
In boosting enrichment up from the 3.5 percent level suitable for powering civilian nuclear plants, Iran moved significantly closer to the 90 percent threshold suitable for the fissile core of a nuclear warhead.
Analysts remained doubtful that Iran would be able to operate the research reactor with its own special fuel.
"As usual, the announcement surely is exaggerated. Producing the fuel plates ... is not so hard. But the plates have to be tested for a considerable period before they can be used safely in the reactor," said Mark Fitzpatrick of London's International Institute for Strategic Studies.
"If Iran is really running the reactor with untested fuel plates, then my advice to the residents surrounding the building would be to move somewhere else. It will be unsafe."
Spent fuel can be reprocessed into plutonium, the alternative key ingredient in atomic bombs. But Western worries about Iran's nuclear program have focused on its enrichment program, which has accumulated enough material for up to several bombs, in the view of nuclear proliferation experts.
Analysts say the fuel rod development itself will not put Iran any closer to producing nuclear weapons, but could be a way of telling Tehran's adversaries that time is running out if they want to find a negotiated solution to the dispute.
Iran appears to have overcome one serious recent obstacle to nuclear development by succeeding in neutralizing and purging the "Stuxnet" computer virus from its nuclear machinery, European and U.S. officials and private experts told Reuters. Many believe Israeli operators planted the virus.
(Additional reporting by Mitra Amiri, Ramin Mostafavi in Tehran, Fredrik Dahl in Vienna, Steve Gutterman in Moscow, John Irish in Paris, Dmitry Zhdannikov and Adrian Croft in London; Editing by Mark Heinrich)